Federal agencies are circumventing the intent and the letter of a law to make the regulatory process more cost effective and less burdensome for small businesses, the National Association of Home Builders (NAHB) told Congress this week. As a result, the regulatory process continues to unnecessarily increase compliance costs and is acting as a drag on the housing and economic recovery.

Testifying on behalf of NAHB before the House Small Business Committee’s Subcommittee on Investigations, Oversight and Regulations, Kansas homebuilder Carl Harris said compliance with the Regulatory Flexibility Act, which requires federal agencies to review regulations for their impact on small businesses and consider less burdensome alternatives, continues to fall far short of the act’s objective.

“Federal agencies often view compliance as largely a procedural function during the federal rulemaking process and not—as Congress intended—an opportunity to reduce the burden of regulations on small businesses,” said Harris, who has participated in the regulatory process. “When federal agencies are unprepared to provide small business review panelists with the information and data necessary to evaluate the costs and compliance obligations, the process breaks down.”

Harris then cited several examples where a smarter and more sensible regulatory process would benefit the housing industry, homebuilders and small businesses. One of these is the Environmental Protection Agency’s (EPA) Lead: Renovation, Repair and Painting (RRP) rule:

EPA failed to convene a small business review panel when it first moved to amend the rule in 2008, Harris told Congressional members.

“This has resulted in excessive compliance costs that ultimately get passed on to consumers,” he said. “An unintended consequence of this rule is that it encourages homeowners to hire uncertified contractors to do the work, or worse, do the work themselves and actually increase the likelihood of disturbing lead-based paint. Poor development and implementation by EPA has jeopardized safety, needlessly raised costs for remodelers and consumers and hindered both job growth and energy efficiency upgrades.”

“Many of the deficiencies in EPA’s RRP rule could have been addressed if the agency had complied with both the letter and the spirit of the Regulatory Flexibility Act,” he added.


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